UPDATE: Lawmakers struggle to compromise in Missouri special session

JEFFERSON CITY — Missouri's special legislative session teetered between collapse and compromise on Tuesday as lawmakers continued to discuss a job-creation proposal backed by Gov. Jay Nixon that would revamp the state's business incentives.

The House canceled a scheduled committee vote Tuesday on the legislation, which would scale back some of Missouri's existing tax credits and create new incentives for business that hire employees, opt to remain in Missouri instead of moving elsewhere or export products internationally through the St. Louis airport.

The standstill in the House came after key Republican representatives denounced the Senate version of the legislation — which passed last week on a bipartisan vote — as unacceptable because it strays too far from a summer agreement among House and Senate leaders and gives too much discretion over business incentives to Nixon's Department of Economic Development.

Nixon said on Tuesday that the Senate legislation marks a "solid step forward in economic development," and he remains optimistic that hesitant House members will warm up to the proposal.

"My sense is as the House members begin filtering back into town, they too will join that spirit of job creation," Nixon said. "I am looking forward to working with them this week and getting this measure to the finish line."

But the session's finish could come without passage of any legislation.

House Economic Development Committee Chairwoman Anne Zerr said Tuesday that she believes the prospects of passing a job-creation bill during special session are now below 50 percent. Zerr said she has no immediate plans to reschedule a committee vote because there is no consensus among senators and representatives.

"If it becomes increasingly apparent that there's no hope we can reach an agreement, then we need to just let the session go. That would be a big disappointment," Zerr, R-St. Charles, told the AP.

As Zerr's committee was hearing several hours of public testimony Monday night, state Rep. John Diehl, R-Town and County, told reporters that the Senate bill was "dead on arrival" in the House and that lawmakers might as well adjourn if no agreement is reached within 48 hours.

That would be fine with some people.

"The sooner that it is ended, the better for the taxpayer," Laura Hausladen, a tea party participant and retiree from Bourbon, told the House committee.

The special session, which is now in its third week, has cost the state about $130,000.

Republican House and Senate leaders announced this summer that they had agreed on a job-creation proposal, which led Nixon to call the special session. But the agreed-upon legislation ran into heavy opposition from some rank-and-file Republican senators and was significantly reshaped.

The plan that passed the Senate includes deeper cuts than previously proposed to a tax credit program for the developers of low-income housing. It also pares back the proposed tax credits earmarked for an international cargo hub at Lambert-St. Louis International Airport to $60 million instead of $360 million. And it keeps in place a tax credit for low-income elderly and disabled residents living in rental housing that Republican leaders had originally targeted for elimination.

But the change that has stirred the most opposition from Republican House leaders is the Senate's inclusion of Nixon's "Compete Missouri" proposal. That plan would consolidate several of Missouri's existing business incentives into a single program that would have easier-to-meet eligibility standards and be based on the number of jobs a business creates. While the bill would bar any incentives if the projected benefit to the state does not exceed the cost, it also would give the department new authority to award upfront cash to companies.

"Compete Missouri is one of the biggest impediments to getting this done, because it gives the governor too much discretion and creates funds which will be spent which are not accountable to the taxpayers," Diehl said.

Zerr also cited the Compete Missouri proposal as a problem, saying it "has promise" but needs improvement.

Nixon said the proposal grew out of a review of Missouri's business development strategies that incorporated the suggestions of numerous local business leaders.

"That product has got strong support from all the economic development groups across the state," Nixon said. "I think it provides a solid template for how economic development in the future should be, which is that we should tie these incentives to job creation as best we can."